Watch the pennies: The art of saving pounds

Spending can be too attractive for many of today’s earners. After waiting for those agonising few days prior to pay-day, desperate for a new pair of shoes, a big night out or a new TV, it can be hugely tempting to splash out – however counter-productive that may be.

It can also be very easy to develop a habit. Once a spender relies on habitual purchases in order to get by, it can be very difficult to break the pattern. ‘Spending addiction’ can be a serious problem, but a huge amount of people exhibit daily symptoms. Buying that morning Latte; going for a few drinks every evening; enjoying a weekend shopping spree; or even buying some DVDs each pay day can all become regular behaviours that are difficult to stop.

In 2007, the UK’s median weekly wage was ?457, meaning that each day the average worker has ?65.30 to spend. This may seem like a large amount, but factor into that mortgage or rent payments, bills, food costs and other daily necessities (real ones), and there may not always be much left to save.

However, one problem with spending every little bit available is that it can reduce the possibilities for investing in something more substantial – house prices, for example, have dropped in recent months. Unfortunately, mortgage lenders affected by the recent credit crunch are forced into demanding larger deposits, so a prospective buyer requires a larger sum – fine if the buyer has developed a saving habit.

Three simple ways to develop a habit are: ‘save the change’; ‘save the fivers’; and ‘re-direct monthly earnings’. Saving change is possibly simplest. The rule is to pick a low denomination coin (possibly 50p) and put aside every coin of lesser value. This will soon result in a growing stash. It may mean losing out on the daily coffee, but could result in a few hundred pounds extra spending-money when it comes to going on holiday.

‘Saving the fivers’ can be a quicker way to save larger amounts, but relies on the same method – anything less than the lowest paper-form denomination should be stashed until it’s time to claim the benefits, which may include paying for that holiday in the first place.

Re-directing earnings before they’re even converted to cash can be a useful way to save larger amounts quicker, or to pay off debt. It simply relies on setting up a monthly standing order to pay a wage portion into an alternative account, whether the amount is a manageable ?50 or even more. This way, the money goes unnoticed each month, with the saver simply adapting to a slightly reduced spending capacity, but enjoying a more substantial long-term effect.

Day-to-day savings, weekly thriftiness or monthly care can be hugely effective in avoiding unnecessary spending on unneeded items. Although it may feel difficult to deny oneself on occasion, in the long run it will pay dividends, and if a level of regularity can be achieved, a large part of the battle is already won.

Disclaimer: This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.